The World Class Manufacturing programme at Chrysler, Fiat & Co.

by T. Netland

The company-specific production system (XPS) of Chrysler is the World Class Manufacturing (WCM) concept, developed by the Fiat Group in 2006. But, what exactly is the WCM? And, what does Chrysler see as keys to success in WCM?

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A few answers are given these days at the 4th annual Lean Management Journal Conference in Birmingham, UK: in his morning keynote, Mauro Pino—Vice President for vehicle assembly operations and the Head of World Class Manufacturing in the Chrysler Group—explains how Chrysler “achieves manufacturing excellence across the globe”. Pino stresses that “WCM is how we do our business. Period.” The presentation reminds me of the WCM factories I visited in Brazil, Spain and Sweden last year, all of which confirmed that WCM can be a powerful improvement system—if implemented seriously. Let’s take a closer look at the concept of WCM.

The development of World Class Manufacturing

WCM was developed by Fiat and partnering firms in 2005. Hajime Yamashina, Professor Emeritus at Kyoto Universty in Japan, played a key role. (Note that the WCM concept of Fiat is not identical to Richard Schonberger’s famous book from 1986 with the same name). From the outset, all Fiat-group companies took part in the new journey towards operational excellence. Consequently, WCM was launched in Fiat’s automobile and powertrain divisions, in Maserati, in Lancia, in Alfa Romeo, and so on. The Fiat-owned companies CNH (manufacturer of Case agricultural equipment and New Holland tractors) and the truck- and engine manufacturer Iveco also use WCM as their XPS. In fact, today, companies as varied as the Royal Mail, Ariston (manufacturer of white goods), Unilever (consumer goods), Atlas Copco (industrial tools), Barilla (pasta) and 12 different transportation companies reportedly use the WCM concept.

The Chrysler Group joined the WCM when Fiat acquired majority shares in 2009 (as a consequence of the financial crisis driving Chrysler to bankruptcy). Today, Chrysler is known as the Comeback Kid. The incredible transformation is partly credited the WCM as a change programme. A stronghold of choosing WCM as an “off-the-shelf XPS” is that companies that join, get the benefit of a world class benchmark from the other participating companies. Today, 166 manufacturing plants in 16 countries are active partners in the worldwide WCM Association. 30 of these are Chrysler plants, whereas 45 belong to Fiat.

The content of World Class Manufacturing

The WCM system is made up of ten technical- and ten managerial pillars, illustrated as a temple (see below). The ten technical pillars are as follows:

1) Safety (Occupational safety)
2) Cost Deployment (Distribution of Costs)
3) Focused Improvement
4a) Autonomous Maintenance
4b) Workplace Organization
5) Professional maintenance
6) Quality Control
7) Logistics & Customer Service
8) Early equipment Management
9) People Development
10) Environment (and Energy)

And the ten managerial pillars are:
1) Management Commitment
2) Clarity of Objectives
3) Route map to WCM
4) Allocation of Highly Qualified People to Model Areas
5) Commitment of the Organization
6) Competence of Organization towards Improvement
7) Time and Budget
8) Level of Detail
9) Level of Expansion
10) Motivation of Operators

Key characteristics of the World Class Manufacturing concept

The Cost Deployment pillar is of particular interest because it differs from the typical XPS (see this post to learn what is “typical”). Cost Deployment is a seven-step accounting technique for assigning actual costs to each loss and waste that happens in a factory. This way, the prioritization of which loss to attack first can be made with economical reasoning. An additional advantage of Cost Deployment is that all improvement work in the organization is assigned an equivalent saving potential. This motivates further improvements, and is the best argument for convincing remaining skeptics and cynics. To do proper Cost Deployment you need to team up persons from accounting, finance and operations.

Another key characteristic of the WCM concept, is that change always starts with a model area. The model areas are pilots for the implementation of the principles. For example, the plant typically chooses the worst performing machine as a model machine for the Autonomous Maintenance pillar. Through a dedicated project, using WCM tools and techniques, this model machine is “brought back to basic condition” and made the best performing machine in the plant. The learning points and good practices are thereafter shared with the rest of the plant. This is however a challenging way to implement an XPS; you risk making “islands of excellence” that do little good for the overall performance of the plant. I guess that’s where cost deployment comes in again and ensures that practices are spread.

A third interesting notion in WCM, is the “concept of zero“. A manager in Brazil explained me: “You can’t discuss with zero; once you suggest another target, you’ll get into all kinds of unfruitful discussions”. The target of WCM is zero waste, zero defects, zero breakdowns and zero inventory. The model areas should prove achievement of zero for several weeks before solutions are spread.

For Chrysler, the latest WCM strategy is a strong focus on education. For that purpose Chrysler has built a World Class Manufacturing Academy (WCMA) in Warren, Michigan. The WCMA is a state-of-the-art training centre for all employees in Chrysler, making use of modern technology and the latest knowledge on practical training. Because 70 % of Chrysler’s work force work in fair proximity to the Academy, many plants can afford sending their employees to training in Warren. The idea is that the plants should use Cost Deployment to identify areas of improvements, and then send employees for specific training in needed tools and techniques—not just general training.

WCM is not a static never-changing improvement programme. In 2010, an Energy sub-pillar was introduced in the Environment pillar “to improve the ability to identify and implement measures to reduce waste and achieve greater energy efficiency”. Obviously, a production improvement programme can also contribute to greater good!

The World Class Manufacturing temple at Chrylser, Fiat &co

The World Class Manufacturing pillars at Chrylser

Are you interested in more information on corporate XPSs?

Check out posts about XPSs in general, the Honeywell Operation System, the Harley Davidson Operating System, or the Toyota Production System.

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Further reading

50 thoughts on “The World Class Manufacturing programme at Chrysler, Fiat & Co.”

  1. Hey Thanks for your thoughts.This is very effective strategy which can be used in Business for the Continuous Improvement and to Produce the World Class Manufacturing Product so as to helps to grow the Business and quality of the Product.

  2. Pingback: Chrysler – How cars are made – Interesting facts about Chrysler’s production system | Auto Research 2014

    • This is reaction of a frustrated person who doesn’t understand what happens around him and try to find an excuse for not doing nothing to improve.
      When he has no workplace start to cry about how unfair is life and how he will lose his house and so on.

    • Some investments are needed for improving in future. If you only waste with money, you don’t understand to logic of WCM.

      • Try applying WCM to a manufacturing facility that only handles heavy parts. The “Logic” of wcm fails miserably. By eliminating Forklifts in a compact plant has decreased productivity 50%, now since our employees physically handle these parts it has increased out incidence rate by a factor of five. The biggest difference is in the bottom line where plant profitability is 6% of what it could be without wcm. Same production numbers as years past, the only difference is WCM integration into half the plant. We are now on the edge of bankruptcy.

  4. WCM is GREAT but Royal Mail fake it for the day, make up figures and fake cultural change. North West Midlands is really bad, they dont engage just remove people. Royal Mails removal of the professor is for them to gain complete control without scientific knowledge or any Lean people they are killing the name. I did meet one guy there who explained Hoshin Kanri to me, but he got moved because he was too good and a threat to the establishment of incompetence. Unless Royal mail choose to do it right there will be no change.

    • Dear reader, I appreciate different viewpoints – both the positive and the more critical. However, anonymous comments will be moderated if offensive. I have removed the names and changed some wording in your comment. I encourage others who know more about the WCM work at Royal Mail to add to the discussion.

  5. World class manufacturing is really great if the management team of the company dare to see the truth. I have witnessed several plants in a major truck company trying to get professor Yamashinas approval due to that their manager have pushed them to get this. A lack of focus on the real company key performance indicators instead of WCM pillar scores make people focus on the wrong thing. Trying to take as many short cuts as possible without actually improving anything.
    I believe a system like WCM should check usage of tools but mostly focusing on the logical approach and the result from this. Humble, not mature leaders/management are the real cause behind a not functioning WCM approach according to me.

  6. It hurt my morale when we seemed to be able to con the auditors into thinking that genuine change was coming to the shop floor. I don’t blame plant level management for this because it is a strategy that has always worked well for them in many programs that preceded WCM. Now I am beginning to see this is becoming a trap for management folks that are foolish enough to think we can get away with it forever. We may genially be required to make WCM real, and we could be in real trouble because of all of the fake data does not support reality. If our advancement through the process stalls because we have not made WCM a part of the culture, we may need to rethink our level of participation on the shop floor and actually really make changes happen for the first time in many years. Wouldn’t that be great?

    • Clearly this guy is from Royal Mail, as they are the only company to really take WCM and make an abortion of it. It could of worked well but they did it in the Royal Mail way.

      The basics of it is WCM works when done with integrity, Royal Mail had one guy who was a LSSBB and really understood the people side of lean and the management there sidelined him because they didnt want to be exposed as lazy and out of place.

      Basically Politics and science do not mix.

  7. I work for a large company which has been trying to implement WCM for a few years now. While I think its a good program which can lead to much improvement, overall what I have found through consultations with other plants and viewing audit results, is that knowledge on its implementation and access to correct resources is largely lacking. I myself run a pillar which requires constant co-ordination with other pillars in order to successfully complete my steps but other pillars are largely falling behind. The administrative work behind completing WCM’s boards, charts etc is too time consuming. It may be ok if you have a pillar team as large as an Italian plant but if you have a team of 2 (soon to be 1) you will face issues. For example I have one board which requires 75 A4 sized slides…..multiply this by 18 areas on top of running ISO management systems and it becomes next to impossible to give WCM the time it requires.

    • Thanks for your sharing your experiences from industry.I think you might be pointing to an important challenge in WCM: it aims for process integration, but tends to focus much on pillars and pillar owners. In a system perspective, this strategy becomes very vulnerable: If one pillar-owner does not follow up, it might put the whole WCM program on stake. It also tends to become very complex. 75 A4 sized slides is ridiculous, that kind of information overload does not bring any positive change. Is WCM practically impossible to implement?

  8. I’m interested to know the link between pillar and department. Trying to envision the future, should the pillars disappear in long term after developing the WCM mindset in departments?

    • Dear Marine! A timely question. I would suggest that the long-term goal would be to dissolve the WCM pillar organization, when WCM is “implemented” and ingrained in the culture. On the other hand, will it ever be? What do you other WCM-specialists think?

  9. The situation with WCM at Royal Mail is sad indeed. We have an almost unlimited budget, huge number of people on full time release for this purpose but the very fact that WCM is imposed from above instead of being nurtured and grown from the shop-floor through consultation and a change of culture, has made it into a mockery of what people like Demming, Ohno, Shingo and other pioneers of the Lean Revolution envisioned. Our office has achieved bronze accreditation and we are going for silver next month but culture is not changed and people are really swiched off. There are some positive changes but it is not a collective effort therefore it is doomed to fail. CULTURE needs to be changed before everything else otherwise nothing will be improved past the audit day. Tai Chi Ohno and Royal Mail’s bullying management culture is a very ugly combination.

    • In Reality none of Royal Mails Mail Centres are worthy of Bronze or Silver status as they fake a lot of information and essentially put on a show for the day instead of doing the hard work. Culture is the biggest part of any lean improvement and clearly the management culture has to change before anything else can move.

  10. “Lies, damn lies and statistics” problem lies in the over-emphasis on data. Data can be manufactured or manipulated. This is the inherent flaw in this system. For lean transformation you need highly qualified and sympathetic management as it is driven from the bottom up, not top down. Managers need to give more authority and freedom to the floor staff to take ownership of their work, empowerment to improve at what they are doing and managers should be able to coach and educate their staff in the principles of lean transformation. You can’t expect all this if managers are ignorant themselves and are more worried about their jobs which they aquired through unfair selection and cronyism.

    • First of all, nice west wing comment. Second, so true. At my plant if there is a tour of wcm heads we will try to impress with a 2 week fury of projects. When they leave so does our effort and energy to accomplish real progress constantly even though the floor workers need real change and we can’t make it happen without management, but they are just worried about pushing product out the door.

    • I dont see the data as the issue, more the integrity of the managers showcasing the data in a certain light to favor themselves rather than without any bias. The Royal Mail Management culture and there willingness to self develop and put the business before there own personal careers is the issue and not WCM itself.

  11. 75 A4 slides is not LEAN at all and I am quite sure that they do not focus on the important things, added value. FOcus on what is essential and added value, you will end-up with a maximum of 10

  12. Not all plants in Royal Mail are the same as North West Midlands. Im sure that it is an exaggeration that “50 people” are being released to do WCM work. I feel that this Carlost is clearly focused more on what he can slate than what he can do to imporve personally with his given situation. If you feel that the managers are taking ownership then take it back. Or would you rather just sit and moan about it? The reason why WCM is clearly not working in your plant is there is no staff by in, there is no change in culture and you are an example in what is holding the plant back, Lack Conviction.

  13. thank you all, it is so nice to know that my plant is not the only one struggling with management and “reality” as far as data goes. the whole frenzy before the audit is so frustrating to me as well.

  14. working for royalmail i have seen a hugh improvement in the way we work and are more efficient and have a good engagement with the staff in our plant.I can not speak for other sites but have really noticed the difference mostly around safety with less accidents and less sick absence due to poor ergonomics.

  15. World Class Manufacturing doesn’t work for all companies. I’ve seen first hand how implementing this process decreases efficiency and creates more work for the operator. Since introduction my company has increased operational costs, decreased quantities of finished product, and has had to hire more employees to compensate for the inefficiency. Within the last 3 years since implementation average pay for manufacturing associates has decreased while the number of employees has directly adding value decreased while non value added employees tripped including the amount of management. Working with heavy parts and the elimination of hoists and forklifts has increased the number of bodily injuries which in turn raised insurance premiums and decreased insurance benefits. WCM is here to create low paying jobs, to compensate for the extremely high maintenance costs of material movement methods involved with double, triple, and quadruple handling of parts.

    • Clearly your company has not taken on the principles or foundations of WCM, because safety is at the heart, often when its forced corners are cut but this leads to unsustainable results.

    • I’m not an exper but the forklift elimination is not an impostion. You need to develop your system in order to don’t need forklifts anymore. It’s no like.. ok! no more forklift. Drag the pieces by hand! because WCM say so!

      In addition I can relate everything I’ve been reading with my company where there is faking data, overwhelming tasks that exceeds the real purpose of the workers and leaders, audits day involves “Hiding the forklifts and cleaning the internal streets” because they haven’t been eliminated, just it is said so.

      I work at a gear box manufacturing plant and the problem is that WCM is been conceived for assembly lines and not manufacturing lines. And it is nearly impossible to apply during downsize periods

      Sorry for my writing, english is not my native language.

  16. where are the suppliers ? OEM companies are supposed to provide critical components from expert suppliers… so the success of those suppliers actually determine the actual quality level….

    ı do not see any word for them..
    .

  17. I have seen practically in Sundram Fasteners, Padi (chennai ) KPM (Madurai) and Pondicherry facilities. They have developed these concepts long back – way back 1996 – thanks to Sueo Yamaguchi – who trained almost all the first line executives……….though after liberalisation much competition is ahead……………..still Sundram
    Fasteners is a pioneer in fastener manufacturing – the legendery businessman Mr Suresh Krishna – grand son of TV Sundram Iyengar and eldest son of Mr T S Krishna

  18. please can you explain how can we use the matrix of cost deployment, i don’t know how can I do these matrix

  19. Dear Mr. Netland,
    I happened to read your piece on the “4A”s response models (Avoid/Adapt/Adopt/Act) to a XPS application in a plant.I really liked how the 4As framework is applicable in understanding the usefulness of a XPS implementation.
    With respect to WCM application, with the info you’ve been able to gather from the various comments, which “A” do you think has been the most common response model?
    I do believe (I happenend to visit >150 mfg plants, and a lot of them applying WCM) that the term “Pink Factory” really fits with a lot of the “WCM application”.
    I’m really curious about your thoughts.

    • Dear External-view. Thank you. Without a doubt; “act” is the most common response. In many cases it is the most rational choice for managers that lack the knowledge, time and energy to make a real attempt at changing the organizational culture. If you want, please connect with me on Linkedin

  20. Dear Mr. Netland, thanks for your answer. I strongly believe that a good XPS in itself should be designed and engineered in order to avoid “Act”-type responses from the plants. The chronical and hysterical refresh of the boards during the couple of weeks before the audits (I’m not surprised to read a lot of WCM practicioners sharing in their comments this routine happening regularly) must be considered negative from the company as a whole, starting from top management at HQ. At the end of the day, the plant managers shouldn’t be considered as guilty in having this behavior (lack of knowledge, time and energy… I don’t think this is the real cause!), they are actors of the game, playing their role.
    An intelligent choice of the level of detail in the boards, of the audit frequency (and scope), a verification of the financial impacts of the improvements (too often there is an open-loop control) can make the difference.

  21. tnetland, I agree on staying away from “one-size-fits-all” Production Systems. Btw, customizing an existing approach with company-specific tools, best practices, etc. is generally proven to be successful. In my opinion, apart from customization, a really crucial aspects of any XPS is the feedback loop:
    1.Audit scores – possibly based on relevant and measurable items – , and
    2.Measured harvested economical benefits – you probably will need a professional team doing the math properly to allocate actual costs and actual (harvested) savings. I mean “professional team” doing the math because the general principles of industrial accounting are often not valid in a dynamic production environment and you need professionalism in accounting correctly for the savings (i.e. think about saving time reducing changeover in a non-bottleneck machine; normal industrial accounting would give credit for improvement through hourly fee*time saved and lot size reduction financial impact, but a good expert can tell you that this is incorrect because this doesn’t translate in any economical benefit)

    Only sophisticated companies are well organized in executing correctly point 2, and the effort is generally worth for a sustainable implementation over time.

  22. Pingback: The World Class Manufacturing programme at Chrysler, Fiat & Co. – better operations | Michel Baudin's Blog

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  24. WCM stands for Working Class Monkeys wcm does not work in low volume manufacturing. No chain hoists, no forklifts, for product that weighs 20 tons. Push that 4,000 lb cart by hand and you have exactly 0.2 seconds to do so. Wcm is cheap manual sweatshop labor. Wasting Company Money making a zoo for the Working Class Monkeys

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  26. I’m shubham and i’m working in Fiat India Automobiles pvt.ltd Pune this is WCM company in India and get the silver medel for powertrain division june2016

  27. The main issue with WCM is that even though the system is designed to find the root cause of losses, it never attacks the design (of both the product and the process) before the designs are an actual real product. Yes I know it ahs atool to correct the design but that is always done once the product is being produced which in the real world translates as wasted money. The tool depends on DATA collected for failures in systems already implemented, it can help on the FI side of the business if management is really committed to make quiet some big investments (the QM´s to be fully effective call for a lot of automation). Still it does not approach appriori the possible causes that can create you an issue, this is famously known in the auto industry as a PFMEA and that is the main factor lacking in WCM.

    I have worked on companies using WCM (FCA specifically) and some that do not use it but do have far much more robust processes at their design stages and I have to admit that the results are far much better on those companies that do not have WCM (but do have a robust design process) than on those that do have WCM. The easiest way to confirm this is by checking the sales that the companies have and the quality perception their customers have of their products. If you consider those two factors, which are really important for healthy businesses, you will see that FCA is nowhere nearby the top players in the auto industry neither in quality or sales volumes and profit per vehicle sold. And you will realize that companies as Atlas Copco are just average and nowhere nearby in quality as competitors like Bosch which does not use WCM but has great engineering work on the design stage.

    So the reality is that WCM does not gives a real advantage over other systems widely in use like VDA or a correctly implemented ISO which in both cases already include FI practices. You will be far much better investing your money on good designs of product and tools than implementing WCM cause I do have to admit that WCM involves generating a huge amount of documentation and administration that makes management loose the focus of their company goal which shall be the product or the service itself, never the system.

    • Dear Marco, thank you for sharing your insight. Excellent reflections and a fair critique of WCM.

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  29. WCM – ruined careers and let bullying rule. Did no good. Myself and my partner ended up in counselling over this dreadful thing. When my partner got a new job he realised what a farce and circus he had been a part of. Now he goe to work happily – gets things done and all is efficient without bullying and not a WCM pillar in sight.

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